Polaris Inc. (PII) Shares Soar 12.13% on Short-Squeeze Volatility

Polaris Inc. (PII) shares surged 12.13% intraday, marking the highest level since January 2025, with a two-day gain of 11.01%.

The strategy of buying PII shares at their recent high and holding for one week underperformed significantly over the past five years. The strategy returned -47.81%, while the benchmark returned 86.85%. The excess return was -134.66%, indicating that the strategy not only failed to match the benchmark's return but also underperformed by a substantial margin.

Polaris Inc. (PII) has been experiencing significant volatility due to a short-covering frenzy. The short interest in the company's stock has increased by 22.46%, leading to a days-to-cover ratio of 9.7. This ratio historically signals a high probability of short-squeeze volatility, which has contributed to the recent price surge. The aggressive options positioning, particularly in the August 50-strike puts and calls, has also added to the market's volatility.

The Recreational Vehicles sector, with Polaris leading, has shown broad-based strength. This sector has attracted value-driven investors due to Polaris' lower P/E ratio compared to the sector average. The strong institutional ownership at 87.36% further suggests confidence in the sector's long-term potential. This institutional backing has likely contributed to the recent bullish sentiment surrounding Polaris Inc. (PII).